The closing date is typically set by the the buyers when they write their initial offer. It is placed on the contract and rides through the transaction. All of the events dictated by buyer and seller and governed by the language in the contract are driving toward that moment, when all parties agree in writing, before a closing professional, to exchange money for property.
The closing is a meeting where all paperwork is signed and money actually exchanges hands. It has been my experience that closing on the day listed in the contract is really important to a clients experience. Lenders need more time, not less to achieve this. On cash transactions, closings can happen faster but when financing companies and banks are involved, it makes most sense to push the closing out to 45 or even 60 days. This gives them time to do all the necessary work in underwriting to achieve a smooth closing.
What happens if a close date is missed?
This is an unforseen event for most buyers and sellers. It is assumed to that the closing will happen on time, but there is a tremendous amount of tasks that have to be completed by inspectors, repairmen, loan originators, underwriters, closers, title attorneys, realtors, buyers and sellers for a closing to take place. The real estate brokers act as a master of ceremonies to see the closing actually take place. They are they glue to keep everyone sticking together through a very messy process. If you have had a good real estate experience it was because you had a great real estate professional who took care of all the items which were unforeseen by you.
Who is hurt by a missed closing date?
Both buyers and sellers are hurt.
Sellers do not receive the financial proceeds of the sale of the property. If they have plans to purchase another hope directly after closing often times that next purchase is contingent upon the proceeds fo the current home being sold. Delaying one closing also delays the second closing.
Buyers are often hurt the worst. Especially if they are moving from an out of town location. I had one buyer arrive into town, moving trucks in tow, only to find the financing company was not done with the underwriting process. They had to stay in a hotel for two nights wondering if the financing company was going to fund their loan. It was very stressful for them.
Contract negotiations and the close date
Often times a buyer will write an offer placing the close date thirty days from the time they wrote the offer. Then buyer and seller will engage in contract negotiations. If negotiations begin at the end of the week, encompassing a weekend or a holiday, then the negotiation process sometimes takes a week or longer. Then all parties sign. The contract is then turned over to the buyers financing company with only three weeks to close. This is often not enough time for the bank or mortgage company to get the underwriting process completed.
All parties need to be aware of how federal holidays and weekends impact timelines and closing. Giving everyone enough time to complete their work ensures a smoother and more successful contract.
Close dates can be moved up!
If the closing date in the contract is set out far enough and all parties agree that nothing is outstanding then it is easy to move the close day up. This is often times preferable to having the underwriting staff stressed out, trying to achieve all that is necessary to provide financing.